**Core Concept**
The question describes a case of scabies, a parasitic skin infestation caused by the mite Sarcoptes scabiei. The itchy rash is a result of an allergic reaction to the mite's saliva and feces. Scabies is highly contagious and can be spread through direct skin-to-skin contact.

**Why the Correct Answer is Right**
The drug of choice for scabies is permethrin, a topical scabicide that kills the mites and their eggs. Permethrin works by disrupting the mite's nervous system, ultimately leading to their death. It is applied from the neck down to all family members, including children, to prevent re-infestation. The treatment is usually repeated in one week to ensure all mites are eliminated.

**Why Each Wrong Option is Incorrect**
**Option A:** This option is incorrect because it does not specify a topical scabicide, which is the recommended treatment for scabies. Oral medications may be used in certain cases, but they are not the first-line treatment.
**Option B:** This option is incorrect because it does not address the need for treatment of all family members, which is crucial in preventing re-infestation.
**Option C:** This option is incorrect because it does not mention permethrin, which is the most commonly recommended treatment for scabies.

**Clinical Pearl / High-Yield Fact**
Scabies is often misdiagnosed as eczema or dermatitis, especially in children. However, the characteristic burrows, intense itching, and family members' involvement are key clues to diagnosing scabies.

**Correct Answer: C. Permethrin cream**